Costa is the UK's #1 coffee shop chain by outlets (ahead of Starbucks), with 2,700 outlets in the UK and Ireland. There are another 1,200 in 30 international markets, mostly joint ventures or franchises with local partners. In 2011 Costa acquired Coffee Nation, a network of standalone self-service coffee machines in third-party convenience stores and other retailers. These were rebranded as Costa Express, and there are now more than 8,500 installations. In addition to its retail business, Costa has a well-established importing, roasting and wholesale operation. The business was originally founded in London in 1971 by brothers Sergio and Bruno Costa, but the most dramatic expansion of the business came after it was acquired by Whitbread in 1995 for £20m. In 2006, Whitbread also transferred to Costa the sponsorship of what had previously been the Whitbread Book Awards. The Costa Book Awards recognise popular British fiction, awarding a total prize fund of £50,000. By the later 2010s, however, Whitbread was refocusing on its core Premier Inn division and announced plans to spin off Costa as a separate company. That plan was abandoned in summer 2018 after it received a handsome £3.9bn offer for the business from Coca-Cola. Costa is now a standalone subsidiary of the global soft drinks giant. Experienced marketer Jill McDonald - ex McDonald's UK, Halfords and Marks & Spencer - was appointed as CEO at the end of 2019. For its final year as a unit of Whitbread, Costa reported turnover of £1.3bn and a net profit of £105m. More than 90% of revenues were generated in the UK.
Capsule checked 8th June 2020
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Adbrands Weekly Update 6th Sep 2018: There's a surprising new entrant in the global coffee retail business: Coca-Cola. In a deal that few observers had expected, Coke announced the acquisition of Costa Coffee, the world's third largest coffee retail business overall after Starbucks and McDonald's, but #1 in Europe. At $5.1bn, it will be Coke's biggest ever purchase, and its first move into direct-to-consumer retail. It is also a clear attempt to fend off potential competition from Europe-based investment group JAB Holding, which not only owns the world's most diversified packaged coffee business as well as several retail coffee bar and sandwich chains, but recently completed the takeover of Coke's soft drinks competitor Dr Pepper Snapple Group. Another rival Nestle owns not only the giant Nescafe and Nespresso coffee brands - and now the packaged Starbucks coffee brand as well - but is also a major competitor in soft drinks, primarily through its global bottled water operations. There are several key advantages to the Costa deal: that brand is already the biggest coffee bar chain in the EMEA region, slightly ahead of Starbucks by outlets. It also has an extensive global network of standalone self-serve vending machines located in service stations and grocery stores. In addition, said Coke CEO James Quincey, the deal provides an entry into the hot beverages sector. "Coffee is one of the fastest-growing beverage categories in the world," he told analysts. "It's also a category with many different elements, from vending to coffee shops to roast-and-ground to instant to pods and capsules. Costa is a platform with a great supply chain in coffee, a world-class roastery, a strong retail presence and a vending system... It also has potential for expansion into ready-to-drink coffee across many markets globally." The business is being acquired from hospitality group Whitbread, which had previously announced plans to spin off Costa as a separate company. Following completion, Whitbread's biggest remaining asset will be the budget hotel chain Premier Inn. Analysts predict that a takeover bid could follow from a larger hotel operator, such as InterContinental or Hilton.
Adbrands Weekly Update 26th Apr 2018: UK hospitality group Whitbread announced plans to spin off its Costa Coffee chain - the UK's biggest, ahead of Starbucks - as a separate public company within the next two years. The decision follows increasing pressure from activist investors to split Costa from Whitbread's Premier Inn hotel chain and restaurants. For the year to March 2018, group revenues were £3.3bn, with just £2.0bn from hotels and restaurants and £1.3bn from Costa.
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